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How Rotterdam’s food cluster fosters innovation, sustainability, profitability

How the Rotterdam Food Cluster is staying at the forefront of the food industry through public-private cooperation.

How the sector will make money in 30 years was the question posed by Sharon Janmaat, food cluster project manager for the City of Rotterdam, during her presentation at the first ever Amsterdam Produce Show, held last November 2-4.

“And what will we need for that in terms of innovation, circularity and digital developments?” she asked.

That is where the Rotterdam Food Cluster comes in. An initiative of the City of Rotterdam, it was set up to create room, facilitate business ideas and accelerate growth so the area can maintain its leading position in food amidst an industry changing under the influence of technological innovation and more awareness of the depletion of natural resources. “We want to move towards a sustainable and resilient economic future,” Janmaat said.

Rotterdam’s unique location is ideal for a cluster

The region has a very high concentration of relevant businesses, research institutions and universities. It is one of few places in the world where all the links in the food chain are within a 30 km radius. About 6,100 food companies – including leading multinational companies such as Unilever, Rijk Zwaan and DSM- are located in this area, employing about 43,000 people and generating annual turnover of over €24 billion.

It is also home to the Port of Rotterdam, the world’s second largest importer of fresh food, Europe’s largest deep sea port and the gateway to over 500 million people. All this combined makes for the world’s leading food production area, Janmaat said. Now the challenge is to maintain that lead in the global food economy in the current economic climate.

The proximity of so many companies in the same chain creates a base for forming clusters and forging both physical and relational links between those clusters. “It is about gaining knowledge and participating in networks,” said Janmaat. “To be able to keep doing what we stand for and for the chain to keep the influence it already has, we are creating the most innovative world food park that is resilient, sustainable, circular as well as profitable.”

Collective innovations

Innovation will be the key to maintain the sector’s success. Janmaat observes that the sector is successful but mainly innovates at a company level. “We want to initiate innovation projects that require more collectivity,” she said.

As a cluster, the companies are able to work together to estimate and share risks effectively, and to make investments in joint benefits. The City of Rotterdam aims to be a trustworthy partner in this process. Janmaat is employed by the city but transcends municipality borders to initiate, connect and create conditions for innovation in the food chain within the region against the backdrop of what is a one-off public-private cooperation.

Data sharing

The focus of the region is on four core themes, one of which is in the field of smart logistics. This industry is very data driven and Janmaat observes that currently a lot of data is not shared. She is convinced data sharing will lead to more sustainable transport as well as greater profitability.

However many companies are reluctant to share data due to the sensitivity of the information it reveals. Data encryption can be a solution. “We are investigating how we can do that and how we can help those companies to evolve towards smart logistics,” Janmaat said. The aim is to get the commitment of stakeholders that are willing to invest in a pilot project.

Another area that has to deal with sensitive information and data sharing is human capital. The Rotterdam Food Cluster seeks to create a human capital pool that combines flexibility and a steady workforce.

Janmaat sees that many of the large flexible workforce that are employed by food companies often have very little connection to the company or the industry they are working in.

“We are investigating new ways of contracting that create a steady pool of people who have the network, knowledge and experience to add value to the company that employs them,” Janmaat said.

Connected to this field of interest work needs to be done on encryption, so companies can safely access the pool, a legal base for the flexible use of the steady pool and a human resource management system that will enable education.

Tennis balls that last longer & other ways to use waste

The depletion of natural resources does make the industry look in different ways and brings about a search for new business models. Sometimes those can be found in the valorisation of waste flows. Such as the producer of tennis balls who found that the balls can be used 10 times longer if they are exposed to a certain biogas that is derived from fresh waste flows. The main goals for the region now are to identify the waste flows and invest in new technology that is needed to unlock the value of fresh waste.

Although sustainable energy has been on the agenda for quite some time already and the sector is aware that investments in sustainable energy are needed, the focus of the Rotterdam Food Cluster is on the collectivity in this area too. “We seek to create a structure in which food companies can be shareholder and not only customers,” said Janmaat. “This way the production of sustainable energy can become part of their business model.” This requires investigation into energy production and creating a legal basis for stakeholders to become shareholders.

Although the initiative is firmly underway and the lines are plotted, a lot of work remains to be done. And that is the key to the Rotterdam Food Cluster. “We aim to encourage working together,” Janmaat said.

Image: Sharon Janmaat during her presentation at the Amsterdam Produce Show

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Climate targets spark innovation to meet cooling demand

A major increase in cooling demand is colliding with the European Union’s ambitious climate and energy strategy which sets strict targets to achieve by 2030. Among them are the need to cut greenhouse gas emissions by at least 40% on 1990 levels and increase energy efficiency by at least 27%.

A major increase in cooling demand is colliding with the European Union’s ambitious climate and energy strategy which sets strict targets to achieve by 2030. Among them are the need to cut greenhouse gas emissions by at least 40% on 1990 levels and increase energy efficiency by at least 27%.

Moreover, the EU is entering a new phase in fluorinated gases (F-gases) regulation in which the availability of one group of them, hydrofluorocarbons (HFCs), will be cut 79% by 2030.

Current uses of HFCs include as a refrigerant in cooling systems, but they are known to act as a greenhouse gas, contributing to global warming. The overall package of EU measures will force the cold chain to focus on the issue of emissions and develop alternatives with less environmental impact.

When it comes to refrigerants, ammonia is one such alternative. “The use of ammonia (NH3) – a naturally occurring refrigerant with zero ozone depletion and global warming potential – offers a wide range of benefits. It is future proof as it will not be phased out by new legislation and offers higher efficiencies than HFCs,” said Aiden Perks, business development manager (South East UK) for Star Refrigeration.

The company has developed low charge ammonia packaged systems which require only a fraction of the refrigerant charge associated with traditional refrigeration systems. The systems are not only more efficient than HFC options, they also have a lower life cycle cost, pose zero risk to employees and the new units cost less than conventional ammonia installations.

Another innovation in the cold chain is the use of liquid air or liquid nitrogen. Dearman Engine Company – which is developing novel zero-emission technology to provide cooling and power – is working on an innovative novel piston engine powered by liquid air or liquid nitrogen. The only exhaust is cold air.

Liquid air or nitrogen is boiled to provide a high pressure gas that is used to fuel transportation vehicles. During the process, cooling is created which is harnessed to cool the load of the vehicle. The process of liquefaction is a very trusted one, said Dearman’s global ambassador Tim Fox. It is over 100 years old and present in every industrialised nation. Moreover, the distribution and storage technology and infrastructure are mature.

The use of the Dearman technology offers abundant benefits – zero-emission at the point of use, reduced noise, lower fuel costs and reduced CO2 emissions, to name but a few. On-road commercial trials will begin shortly.

So although it looks like a lot is hitting the cold chain sector – a huge increase in demand and many new regulations – there are also many innovative solutions helping propel the sector towards a bright future.


Top image: European Commission: 2030 Energy Strategy


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Amsterdam Produce Show attracts 100 exhibitors

The first ever Amsterdam Produce Show and Conference (APS) took place November 2-4, 2016 at the Dutch city’s iconic Westergasfabriek and was organised and hosted by the creators of the New York Produce Show and the London Produce Show.

The first ever Amsterdam Produce Show and Conference (APS) took place November 2-4, 2016 at the Dutch city’s iconic Westergasfabriek and was organised and hosted by the creators of the New York Produce Show and the London Produce Show.

The event kicked off with a cocktail party on November 2, followed by a thought leaders breakfast panel, trade exhibition, chef demonstration theatre and educational seminars on November 3. On the final day of the APS participants could take part in industry tours, visiting retail, production, trade or logistical companies.

The APS programme was organised around four core themes – innovation, education, sustainability and health – and designed to provide an opportunity to think about how high level global concerns will drive success in the produce trade in years to come.

According to the organisers, the seminar focus was on the unique lessons that can be learned from the role that the Netherlands plays in the global produce industry. A quarter of all global trade in horticultural produce is estimated to go through Holland.

The seminars touched on a host of different subjects ranging from increasing consumption, the impact of agribusiness, corporate social responsibility, new ways to determine quality, cooperation through food clusters, organic farming or reduction of food waste.

Although from a different perspective, many presentations covered future business models, the need for communication, co-operation and the creating value.

The trade exhibition gave over a 100 Dutch and international trade exhibitors direct access to a wide range of produce buyers from the retail, foodservice and wholesale sectors. Among them were:

– Jan Willem van Wyk, Jurgen Smith and their colleague starting the European branch of The Grape Co.

– Ryan Nichol from Coolsan and his colleague bringing ChillSafe – which reduces bacteria, mould and excess ethylene in storage and transit – to Europe.

– NatureSeal applied to fresh cut bananas preventing them from discolouration for up to 4-5 days.



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Good year for Dutch supermarkets

Although many think that fresh produce is not the consumer’s category of choice for online purchases, market researcher IRI Netherlands proves them wrong

Total supermarket sales rose to €35 billion in 2015, an increase of 4.6% compared to 2014. This growth can partly be attributed to the 53rd week in 2015.

Calculated over 52 weeks, the growth was 2.5%. The figures include all the major Dutch supermarkets with the exception of Aldi and Lidl, who do not make this information available.

Not all segments are growing at the same pace, though. One segment that clearly stands out is fresh produce, with a 7.6% increase in sales over 2015. The total sales for this segment amount to some €4 billion.

IRI attributes the increase to the consumer, who is clearly more conscious of healthy eating. This growth is also driven by a focus on origin and on traditional production as well as by attention to healthy snacking. The latter translates into increased sales of snack tomatoes, for example.

About 30% of the tomatoes sold are snack varieties. Moreover, consumers bought more sustainable products in 2015, reports IRI. The sustainable products category includes organic products, UTZ (a sustainable farming programme and label), MSC (Marine Stewardship Council) or Better Life (a label for animal-friendly production of meat and eggs).

Organic is the largest group of sustainable products, accounting for 28% of sales within this category. IRI reports growth for all products with a sustainability label.

Record in organic food spending: €928 million

Although still a niche market, the market for organic food in the Netherlands is growing fast and has a lot of potential, reports the economic office of ABN AMRO bank in the Netherlands in its June 2016 Agrifood Update. In the last 10 years, the annual average growth of spending on organic food in the Dutch retail sector has been 9%. In 2015, a record high of €1 billion on organic food spending was reached.

Fresh produce accounts for 23% of that figure. ABN AMRO observes that food is becoming increasingly important as a part of one’s lifestyle and sees this as a positive development for the future of organic food. It leads the Dutch bank to expect an average annual growth of 7% in the coming 5 years, leading to total expected spending on organic food of €1.5 billion in 2020.

The current 3% market share of organic food is expected to rise to 5% in 2020. Not only are the prospects in the Netherlands favourable but the global turnover is expected to double by 2020 (source Bionext Trendreport Organic) to US$ 160 billion, offering huge potential for businesses in the organic chain. In Europe the organic food market is worth about €22 billion.

Fresh fruit biggest category in online sales

Although many think that fresh produce is not the consumer’s category of choice for online purchases, market researcher IRI Netherlands proves them wrong. Fresh fruit appears to be the biggest category in online supermarket sales even though it ranks 5th in offline sales. The data stem from IRI’s newly launched e-commerce read tool, which collects sales data on online supermarket purchases. Fresh vegetables rank 2nd both on- and offline, although IRI notes that the volume of fresh vegetables in online sales is still much smaller than offline. IRI assumes that in this category the consumer probably prefers to actually see the product before buying it.

The online shopper differs from the regular shopper, IRI reports. The online shopper is younger (especially over-represented in the 25- 39 years demographic) and often has a family and an average or above-average income. The impact of the different shopper profiles is reflected in the sales data. In online fresh vegetable sales, for instance, the more expensive pre-packaged vegetable packs are chosen more often. While the share of online sales within the supermarkets’ total turnover is currently still small, e-commerce sales are growing rapidly and IRI expects even stronger growth in the future.

Albert Heijn secures frontrunner position

The Dutch retail landscape has not changed much in 2015. Albert Heijn has managed to stabilise its frontrunner position and now has a market share of 35%. The Jumbo Group decreased a bit due to overlap when converting the last of the C1000 stores it took over in 2011. Whereas discounters Aldi and Lidl had more or less the same market share in 2012, it has become clear that Lidl, now at a 10% market share, has managed to develop and secure its position.

Organic food imports

Some of the large organic-consuming counties, such as France and Germany, depend heavily on imports to satisfy their internal markets.

ABN AMRO reports that Dutch exports of organic food total €928 million. ABN AMRO sees organic production as a crucial factor in the growth of the organic trade, as the production cannot keep up with the demand.

In Europe as a whole, 5.7% of the total acreage is used to produce organic produce. In Southern and Eastern Europe, as well as in Scandinavia, larger proportions of the total acreage are devoted to organic production. In Western Europe – and that is certainly true for the Netherlands with 2.9% – the acreage is falling behind. This leads ABN AMRO to conclude that organic production could be a good option in the search for added value. 


This article first appeared on page 20 of edition 145 (Sep-Oct 2016) of Eurofresh Distribution magazine. Read more retail and fresh produce sector news in that issue at:

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Reynolds: “Food safety is the foundation of our business”

Leading UK based produce supplier to the foodservice industry, Reynolds, focuses on food safety, product consistency and availability.

The UK foodservice industry is estimated to be worth in the region of £85 billion and although 2016 did not begin so well, the average annual growth is around 2.5% and expected to grow to 3% over the next 3 years said Matthew Jones, Reynolds’ senior buyer, at the international conference ‘Tomatoes, trends towards 2020’ held April 13-15 in Antwerp

The forecasts auger well for Reynolds, a leading distributor to customers including restaurants, catering, schools and healthcare institutions. Consistency of product is very important to its customers, which is why its quality control (QC) team checks every consignment against Reynolds’ own specifications. ”Product consistency is absolutely essential,” Jones said.

Another important focus is food safety. “Food safety is the foundation of this business and critical to our brand,” he said. BRC Food, Assured Food Standards and GLOBALG.A.P. are the standards required of Reynolds’ suppliers to ensure food safety and full traceability. In addition, Reynolds aims for a contracted grower base and long term partnerships with both customers and suppliers, so that all parties involved can grow together. “A stable supply base is a must so we can ensure our customers have a secure robust supply chain and consistent availability,” Jones said.

Flavour, quality and colour increasingly important

As one of the UK’s largest fruit and vegetable suppliers, Reynolds offers a broad range of fresh produce. For tomatoes, the most segmented category, Jones sees a shift in focus from price to other aspects. “In our business, tomatoes are often seen as a commodity and price is still king, but we are seeing a gradual shift towards flavour, quality and colour,” he said.

Education plays an important role in that shift. During customer presentations, Reynolds highlights new products and educates customers regarding the product characteristics, with a clear outlook to the future. “Varietal development is so important for meeting future demand and taste is a critical element.” For the sourcing of tomatoes, Reynolds aims for a long-term contracted supply base. “These days we are looking for commitment from growers and take a long term perspective,” Jones said.

One aspect of that is the opportunity to work with the growers on varietal development. Some of the research and development activities currently going on include work on mixed heirloom tomatoes, loose cherry tomatoes and on the vine specialties. Often imports are favoured because of their competitive pricing and consistent availability.

On the vine tomato categories growing

Reynolds has a 21-strong product assortment in tomatoes. “The tomato has got to be fit for purpose,” Jones said. For instance, the tomato used for sandwiches has got to be intense and contain less juice. For salads there is a focus on the smaller cocktail varieties, Datterini and Marzanino, for flavour, and green tomatoes are great for chutneys. Specialities such as Tomatillos Kumatos are also offered in order to allow Reynolds customers to keep up with industry trends.

Some of the current developments Reynolds sees within the tomato category include the increase in demand for on the vine categories. “The smaller tomatoes are being downsized to cocktail size and on the vine to bring the flavour profile back to the consumer,” Jones said.

Regarding the generic round tomato, Reynolds sees the sales morphing from 3 sizes to just 1 middle size. Organic tomatoes are a small category, mainly due to prices, but Jones expects growth in this category in 2-3 years. The plum tomato appears to be quite stable and the beef tomato category is growing due to increased interest in fast food and the growing number of hamburger restaurants.  

Customers value heritage

Heritage is playing more of a role in foodservice, since it can offer a point of differentiation for chefs. It is essential to listen to what the customer wants and work with the growers to deliver it,” Jones said.

Aside from the current developments, Reynolds expects major categories such as that of the tomato to evolve even further. Although it is believed that overall tomato consumption is dropping in the UK, Jones does not himself see a decline in volume. However, he thinks the assortment could reduce in SKU’s while volumes are maintained.  Moreover, size is an important matter. “Size is very important to us – we try to use the whole range and the whole crop through the sizes, because we can command better prices,” he said.

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Belgian tomatoes’ strong focus on exports

Exports to France and the Netherlands have shown an increase over the last 4 years, whereas sales to Germany – although still a considerable partner – and the Czech Republic have slumped, while Belgian tomato exports to the UK have remained stable.

With an increase of 20% over the last decade and growth of 3.3% in 2015, Belgian firms have managed to increase their tomato export volumes considerably. This is good news for a country where 70% of all tomatoes produced are exported. In 2015 a record high of 236,497 tons of fresh tomatoes were exported (source Eurostat figures via Vlam). Lava (cooperative of all Belgian fruit and vegetable auctions) reports that the main exporting partners are France, Germany, the Netherlands, the UK and the Czech Republic. Exports to France and the Netherlands have shown an increase over the last 4 years, whereas sales to Germany – although still a considerable partner – and the Czech Republic have slumped, while Belgian tomato exports to the UK have remained stable. Belgian tomato production takes place in Flanders, where some 250 growers produced 268 million kg on 500 hectares in 2015. Roughly half of the production is on the vine (47%) and the other half are loose tomatoes (53%), said Raf De Blaiser of LAVA at the international conference on ‘Tomatoes, trends towards 2020’ held in April 2016 in Antwerp. Volume-wise, both categories are growing, but vine tomatoes have shown a steeper rise since 2007 than loose tomatoes.

Specialties on the rise, with 20% of acreage

It is evident that in both categories -loose and vine- the specialities are becoming increasingly important. Whereas in 2005 the area used to produce speciality tomatoes was less than 10 hectares, in 2016 almost the entire 110 hectares, over 20% of the total acreage, are used for tomato growing. Specifically, since 2011 the acreage used for specialities has shown a steep growth curve. At the same time, a considerable decline in the production of beef tomatoes is visible. In 2005 some 150 hectares were reserved for this product, but in 2016 only 60 hectares are left. LAVA reports that on 70 hectares (15% of the total acreage) tomatoes are produced under controlled lighting conditions. The production technique provides an earlier harvest, a better spread of the total production and local produce in the winter. As for loose tomatoes, 49% are of the intermediate type, 23% beef tomatoes, 5% plum and 23% specialties. For tomatoes on the vine, 50% are in the ‘medium/large’ size range, 22% are medium-sized, while cocktail and plum tomatoes account for 4% and 3%, respectively, and 21% are speciality vine tomatoes. Speciality tomatoes include Coeur de boeuf, cherry plum tomatoes both on the vine and loose, intense tomatoes, yellow and pink tomatoes or Kumatos to name but a few.

Simultaneous auction clock

Belgian tomatoes are sold either via the auction clock or through long-term sales to wholesalers and retailers, mostly into the EU. The auctions created a system where the auction clock of all LAVA auctions is operated simultaneously. The Flandria label plays a prominent role in marketing Belgian fresh produce and the Flandria quality seal guarantees tomatoes of the highest quality, sustainably grown by family companies. The Flandria segmentation for tomatoes was introduced in 1996 and includes variety trials as well as quality control through the measurement of a series of criteria including size, colour, taste and firmness, to name but a few. These criteria are applied in a knockout system in the event of an insufficient score.


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Autogrill sourcing local, fresh, authentic produce

The world leader in food services prepares for the future by responding to changing needs

As Autogrill — the world’s leading provider of food and beverage services for travellers — says in its mission statement, the consumer is central to its approach. Autogrill has identified different groups of guests and finds the right products for each group. “The food and beverage market is changing. There are new needs. People handle food and beverages in a different way and as a business owner you have to prepare for the right needs,” said Stefano Teatini of Autogrill EU food and beverage Purchase Managers Restaurant Concepts during his address to the international conference on ‘Tomatoes, trends towards 2020’ held from 13 to15 April 2016 in Antwerp. For every moment of use, Autogrill has mapped the customer’s needs. The same customer may have different needs depending on the situation. A quick meal at an airport calls for different products from a meal during a leisurely family outing. The process results in linking customer needs to product properties.

Local, fresh and authentic

For instance, a tomato that is local, fresh, authentic and tasteful will appeal to a consumer who is looking for healthy food. Shape and colour are important as well. For the consumer who is into fun and sharing, tomatoes that are crazy and unusual are perfectly suitable, whereas the consumer that values convenience and pragmatism will need a lower price and a round red tomato with a longer shelf life. Finding the right products for the right customer also takes into account how the customer looks at food and beverages, now and in the future. Autogrill has identified a number of trends it will be focusing on for the coming 10 to 15 years. “One of those trends is linking local to non-local products,” Teatini said.”For instance, you take a simple sandwich and add a Korean or Indian spice to it to create a completely new product.” New flavours are expected to influence the food and beverage industry. Teatini thinks particularly that North African spices like harissa, sumac or dukka will cross our paths in the coming years.

Preventing food waste, and GMO-free products

Another of the societal developments that Autogrill has picked up on is the customer’s resistance to food being wasted. The fact that 50% of all food is wasted worldwide (source: British Institution of Mechanical Engineers) calls for a response. “Trash to treasure remains important. A more sustainable use of the available resources is a trend,” Teatini said. It is one of Autogrill’s priorities to address this issue. It aims for head to tail use of all products and monitors the food waste for every location on a monthly basis, working towards a target waste of maximum 1% of the total volume bought. Although the discussion may have faded away a bit, the consumer remains negative on GMOs (genetically modified organisms). A massive 70% of consumers say they would be more likely to purchase foods or beverages described as GMO-free and 34% would be willing to pay more for GMO-free menu items (source: Technomic Healthy Eating Consumer Trend Report 2014). “We decided to go GMO-free and communicate about that,” Teatini said. “90% of the consumers think that GMO-free products are better and tastier and that is something we are working with.”

Changing logistics

Evidently, in an organisation as large as Autogrill, procurement is very important. The firm has observed a shift towards an increasing interest in local products. The demand for fresh local products satisfies the consumer but puts a strain on the food supply chain. It challenges a logistics system that is geared towards consolidation, centralisation and a long shelf life. “We see that change and are in the process of finding solutions for it,” Teatini said.

“How can we modify our logistics for the new local product?” When sourcing local products, it is also important to take aspects like traceability, food safety and animal welfare into account, because apart from being local the customers want the products to be safe as well. And there is another logistics aspect — Autogrill calls it the delivery revolution — that is affecting the food and beverage industry. “Consumers want to get food at the time and in the way they choose, 24/7,” Teatini said. Already there are several initiatives that facilitate food being delivered at home. For instance, McDonalds have a delivery service or Post Mates US picks up the meal you ordered from a restaurant.


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Direct sourcing is key for IPL and ASDA

IPL applies a direct sourcing model where the lines are kept as short as possible. It operates many processing facilities in the UK and abroad, including for potatoes, bananas and meat. It is Asda’s sole supplier for various products, including fresh produce.

As well as being the biggest single importer of produce in the UK, Asda subsidiary International Procurement & Logistics (IPL) – the UK retail chain’s sourcing and procurement arm – is involved in exports. IPL Export, its export operation, supports the direct import strategies of Asda-owner Walmart as well as Sam’s Club, its retail warehouse chain. Dutch aubergines and Spanish olive oil for Canada, UK beer for the Japanese market and milk from Yorkshire for China are just some examples of IPL Export’s activities.

And upstreaming is another of the operations it carries out for Walmart. “We are building an IPL structure in Walmart and Sam’s Club,” said IPL technical team leader Bas Tramper, during the international conference on ‘Tomatoes, trends towards 2020’ held 13 to15 April 2016 in Antwerp.”In multiple locations there are IPL structures supplying and buying, like in the UK. We are working on the same basics as we do in the UK.” The activities covered span produce, meat and bakery facilities and structures are now also being created in Japan and Mexico.

IPL’s direct sourcing model

IPL applies a direct sourcing model where the lines are kept as short as possible. It operates many processing facilities in the UK and abroad, including for potatoes, bananas and meat. It is Asda’s sole supplier for various products, including fresh produce. Its sourcing method depends on how big a product is. A small line can be bought straight from a marketing organisation.

“But a product like tomatoes we buy as deep as possible to guarantee freshness, better quality and lower costs,” Tramper said. On the supply chain, IPL cuts out the exporter, transporter and packer, delivering the goods directly to Asda and bringing in expertise and leverage. “It brings a lot of added value.”

IPL has offices all over the globe to ensure the best sources in which value, quality and availability are important aspects. Tramper said a fall in complaints to Asda about fruit and vegetables illustrates the success of the direct sourcing model.

“This number is decreasing year after year,” he said. Indeed there was an impressive 65% reduction between 2009 and 2015. Conducted at Asda’s request by Cambridge university, there is also continuous assessment of the quality Asda delivers, relative to that of its competitors. Asda appears to be the best in the market overall and continues to improve its performance.

However, consumer perception is another story. Tramper explained that from a historic point of view, customers had the perception that the quality of Asda’s products was not top level. “It takes years and years to improve your image on that,” he said, stressing that quality improvement needs to occur on a daily basis and the continuous measurement of performance is key.

Tomatoes, the strategic category of the season

The assortment of tomatoes Asda offers is specific to the tastes of UK consumers, who generally perceive that a tomato should be both round and red. Another important factor to take into account is the low average income in the UK, explained Tramper. Asda focuses on the lower price segment and has a market share of around 17%. The tomato assortment is differentiated into three price categories: the extra special, a very nice tomato with attractive packaging, which is 15% of the total; the Asda brand, with 84% by far the largest and most important category; and the value pack, which accounts for just 1% of the units sold. The extra special tomatoes do not yet have a significant volume but sales are slowly rising, Tramper said.

Within this price differentiation there are different types of tomatoes of which the extra special varieties have the largest share with 35% of the units sold. “There are about 21 SKUs and yes, we are reducing the number of SKUs,” he said. Within this segment there is overlap in varieties. Different types of tomatoes have been ruled out as a result. ”We have ruled out the cocktail tomatoes because there was no sales for that.” Reducing more types will result in better choice for the customer as it is better not to make it “too difficult” for the customer, Tramper believes. Next are the loose round tomatoes (30%), cherry tomatoes (20%) and large tomatoes on the vine – where tasty varieties are also selected – accounting for 15% of the units sold.

Tramper expects the loose round tomato in a six pack to remain a very important category to Asda, since the volume is 30% of the units sold and it represents only 1 SKU. But the focus will be on how to improve the experience of the customer and with that stimulate repeat purchases. Where the extra special tomato is concerned, it is expected that over the next 4-5 years the assortment will take a different shape with less types. Tramper stresses that the optimisation of the tomato assortment should take place together with the breeders and will be an ongoing process.

Asda and IPL at a glance

Asda was formed when two separate companies, Associated Dairies and the Asquith brothers’ supermarket chain Queen’s, came together in 1965. Asda Stores Ltd was created, a supermarket committed to offering its customers ‘permanently low prices’. In 1999, Asda was acquired by Walmart Stores Inc., becoming part of the world’s biggest retailer.

Since then, Asda has become Britain’s second largest supermarket and its mission is to be nation’s most trusted retailer. Asda also holds a leading position in the UK clothing market with the George clothing brand and is increasingly making inroads into the UK’s general merchandise sector.

IPL was founded at Asda’s request and since 2009 has been a wholly owned subsidiary of Asda. IPL focuses on its role as Asda’s largest supplier. It also sources products for other Walmart markets. IPL operates various processing facilities in the UK and has multiple overseas offices.




  • Total number of stores 616
  • Includes: Supercentres 32, Superstores 332, Asda Living stores 34, Supermarkets 201, Standalone petrol stations 15
  • Customers on an annual basis: Over 936 million
  • Number of employees: 172,000
  • Focus: Permanently low prices


Source of slides: Bas Tramper presentation on trends in tomato consumption and sales
Other images: IPL/Asda


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Consumer satisfaction key to increasing tomato consumption

Worldwide production of tomatoes shows an upward trend, but the same can’t be said for per capita consumption of fresh produce

Worldwide production of tomatoes shows an upward trend, but the same can’t be said for per capita consumption of fresh produce.

According to Philippe Binard of Freshfel, the European fresh produce association, daily consumption in Europe is below the World Health Organisation recommendation of 400 g per capita. In what Freshfel calls an alarming trend, per capita daily EU consumption of fresh fruit and vegetables has decreased by 80 g – the equivalent of one piece of fruit – in the last decade.

And in the tomato category, the same trend is seen. Over the period 2004-13, average annual per capita consumption dropped 12 kg to sit at just above 9.5 kg – a decline of over 20% in 10 years. Yet at the same time, surveys show consumers overwhelmingly recognise that eating fruit and vegetables is one of the pillars of a healthy diet. (In a Eurobarometer poll, when asked what eating a healthy diet involves, 58% of respondents cited eating more fruit and vegetables.)

Speaking at the international conference ‘Tomatoes, trends towards 2020’ held in Antwerp in April, Binard said the many health benefits of eating fruit and vegetables – the production of which has a low impact on the environment – should therefore be emphasised more in communication with consumers. In that respect there also is pressure from NGO monitoring of pesticide issues but, “with a compliance rate of 99.1%, tomato production is extremely on the right track despite a negative image,” he said.

Current trends, such as vegetarianism, offer some opportunities in regards to increasing fresh produce consumption. The fact that more and more consumers are embracing a vegetarian or vegan lifestyle will likely lead to a higher intake of fresh fruit and vegetables: “A good development for the fresh produce sector,” Binard said.

Other consumers favour local, seasonal or organic products – all factors that can be harnessed in the marketing of tomatoes. “We fail to know the consumer,” Binard said, yet they should be the central focus in this process. He believes other sectors have a better picture of who their customer is and how to cater to their needs. External support can make a difference. More EU funding is available and the co-financing from the EU is moving from 50% to 80%, an improvement Binard considers likely to motivate more projects from the sector.

Tomato production growing faster than veggies overall

The popularity of tomato cultivation is increasing. Freshfel figures show production is growing very fast worldwide and has already reached over 130 million tons. Of the 44% rise in world vegetable production over 2000-13, nearly half of this derived from tomatoes.

Tomatoes also command a large share – 16% – of the fresh vegetable segment globally. Of the total global tomato production volume, about 88 million tons are destined for the fresh market and the remaining 42 million tons for processing. The top five global producers – China, the EU, India, the US and Turkey – together account for about 70% of production. The average annual EU tomato production of over 16 million tons – of which 41% is fresh tomatoes and 59% is processed – delivers 12% of global production.

The EU’s fresh vegetable production totals about 35 million tons, of which fresh tomatoes – which are the largest individual vegetable crop with a total of 6.8 million tons in 2014 – account for about 19%. About 7.8% of world tomato production takes place in the EU and while European fresh tomato production has seen some fluctuation, it been more or less stable over the past decade.

The volume of tomatoes destined for processing, however, was much more volatile over the period 2005-14, with a peak in production of nearly 11 million tons 2009 and a big dip in 2014 when the volume fell to under 8 million tons.

Just five EU member states are responsible for some 80% of EU tomato production: Spain, Italy, the Netherlands, France and Greece. While production has been rising in most EU countries since 2012 and overall European fresh tomato production is fairly steady, some countries have seen changes in terms of volume. In the past decade, production in Italy and Greece has declined, that of France has been more or less stable, and in the Netherlands and Spain, volumes increased over 2005-14.

On average, the ratio of fresh to processed tomatoes in the EU is about 40/60, but can vary widely within member states. For instance, the Netherlands and Belgium almost exclusively cater to the fresh tomato market, whereas in France and Spain the respective shares for the fresh market are 75% and 45% respectively. Major tomato grower Italy has a strong focus on the market for processed tomatoes, devoting just 18% of its production to supplying fresh tomatoes.

Exports under pressure, imports increasing

The tomatoes grown in Europe are predominantly consumed and sold within Europe. In 2014, intra-EU trade in fresh tomatoes amounted to 2.6 million tons with a value of €3 billion, meaning an average price of €1.13/kg. The top 5 EU destinations for fresh tomatoes are Germany, the UK, France, the Netherlands and Spain, according to Freshfel.

Last year, extra-EU exports of fresh tomatoes totalled 201,000 tons – worth €357 million – with an average price of €0.85/kg. Though exports to Belarus have partially replaced those to Russia, the impact of the Russian embargo has had a big impact on these exports, which have plunged 44% in volume in just two years after totalling 363,000 tons in 2013. The corresponding value fell from €435 million to €225 million, a decline of 48%. The top three non-EU markets for EU tomatoes are Belarus, Switzerland and Norway.

Imports of fresh tomatoes into the EU

Imports show an upward trend, having climbed 145% in 15 years to reach 487,000 tons in 2015, at an average price of €1.18/ kg for a total value of €415 million.

With a volume of 387,000 tons in 2015, Morocco is by far the EU’s largest fresh tomato supplier, having doubled its volume in the last decade. Next comes Turkey, which supplies around 50,000 tons to the EU. Up-and-coming import partners are African countries, such as Tunisia and Senegal, and new players from the Balkan region, such as Albania, Serbia and Macedonia.


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Reefer business explores opportunities

Thomas Eskesen, founder of the Eskesen advisory group, sees more opportunities than threats for the global reefer shipping business, he told the audience during the 19th European Cold Chain Conference, held in Amsterdam March 6-8.

Today’s global reefer shipping business is influenced by many different macro drivers. To name but a few, global population growth, climatological changes, currency exchange rates and food safety issues can all affect the global flow of goods and therefore the global shipping business. Among all these drivers, Thomas Eskesen, founder of the Eskesen advisory group, sees more opportunities than threats, he told the audience during the 19th European Cold Chain Conference, held in Amsterdam March 6-8. However a dose of realism for the current situation is not misplaced. While over 2001-2007, growth figures in the global container shipping industry were significant – an annual growth rate of over 10% was not uncommon – a decline started leading to negative figures in 2009. Back when expectations were high, a lot of new ships were built, now leading to overcapacity. The overcapacity calls for more realistic growth expectations. Growth is slowing down and thus changing the dynamics of the sector. Eskesen warned that experts are advising that we get used to a much lower growth path than in the past.

Back to “normal growth”

“Growth percentages of around 2-3% will be the new normal,” he said. However in the short term things look less solid. “The second half of 2015 has not been okay and 2016 will be the worst in history,” Eskesen said. In order to control the situation, shipping lines need to cut costs. The forming of alliances is one way to control costs. “For the first time there is a correlation between size and profitability,” Eskesen said. As a result, “in 2015 pretty much everyone is cooperating to increase scale.” He said mergers are happening now and will be happening more often in order to increase scale and reduce costs. The future will bring larger ships and fewer carriers. The increased scale and cost reduction do have implications. There will be less carrier differentiation and shipping lines are expected to further simplify their services. It may imply a different accessibility since the alliances will likely not call at all the same ports as the individual carriers did. Also an increase in food miles and longer journeys should be expected due to slow steaming, which costs less but take longer.

Thomas Eskesen, founder of the Eskesen advisory group

Intra-Asia trade will be huge

Yet one of the bright spots is the expected average growth of trade in containerised perishables. For the period between 2014 and 2019, annual growth of 3.3% for the perishable trade is forecast. This is more or less in line with the estimated growth in GDP. Although growth certainly is expected in reefer business, the demand knows geographic differences. Europe is definitely not the place where growth will take place in terms of imports. The trade into Europe from Latin America shows a decline. Also, due to increased demand from emerging markets, producers have more choice in where to sell their produce, giving them the possibility to choose less demanding markets. In that scenario, Europe, which is known for its more exacting quality and food safety requirements, could be left behind.

In terms of imports the Middle East and South Asia show the brightest figures – a CAGR of 5.9% between 2014 and 2019. Although growth is expected to slow down for Asia Pacific, it will remain the largest import region. In terms of perishable exports, a slowdown in growth is expected for all regions while Europe is the only region to see its market share rise. Brazil and Russia – once the promising B and R of the BRIC countries – seem not to be able to live up to previous economic expectations. Eskesen signals that currency issues – such as the strong dollar against the weak euro- can change the flow of goods, but in the long run currency impact is small. Of much more impact are trade barriers, like the ones affecting Russian trade. Eskesen identifies trade barriers as one of the lasting geographical key trends that will affect the shipping business. It is also why he is positive about the transatlantic trade openings the TTIP (Transatlantic Trade and Investment Partnership) could offer . Asia, on the other hand, is doing well, with India and specifically China as the success story. It is where the population growth – and increasing middle class – will be. It is also where retail is developing rapidly and it is –although to a lesser extent – where the economy is still growing. Significant growth into China is expected. It will be predominantly trading partners south east Asia and Latin America who will be responsible for the trade growth into China. “The intra-Asia trade will be huge and overall much more will be traded into Asia,” Eskesen said.

Emerging markets, traceability and transparency

Besides offering many opportunities, emerging markets can also pose challenges and bring about uncertainties. The cold chain in those markets is not yet very sophisticated and is therefore very expensive. Also surrounding food safety and the cold chain there is no global legislation in place. It remains to be seen how this will be shaped in countries like India and China and how enforcement will be arranged. Eskesen observes that investments in the cold chain in emerging markets are much needed but also very much dependent on legislation. “It will not stand a chance if the competition can work cheaper on lesser standards,” he said.

Traceability is another factor to be taken into account. “It is big and will even be bigger. We need to know what happens inside the box.” He said transparency is needed to change the industry. With regards to the cargo, carriers do have a big responsibility and more transparency would also offer more possibilities for analysis of a given situation. Definitely an uncertainty is the weather and the much discussed climatological changes are felt by the shipping industry. They signal that indeed the weather is getting more and more extreme, making business forecasting even more complicated.

All in all, the current state of the reefer business seems to show a mixed landscape but one where uncertainties, new developments and cost cutting measures can transition the sector towards growth.